Sterling is too strong and must weaken if Britain is to secure a balanced recovery, one of the Bank of England’s policymakers warned on Friday.

Martin Weale, an external member of the Monetary Policy Committee (MPC), said that while the pound’s recent strength had helped to ease the cost of living, he remained uncomfortable with its current value.

“The recent rise in sterling has, of course, helped [lower inflation],” Mr Weale said in a speech in London. “But I cannot say I feel comfortable with it. It only worsens my concerns about the balance of payments.”

The UK’s current account deficit is on course to hit a 25-year high next year, making it the worst of any major industrial country. A strong pound has helped drive the deficit, by making British exports unattractive, while fuelling imports of cheaper goods from abroad.

Marian Bell, a member of the MPC between 2002 and 2005, agreed the pound was overvalued. “Sterling has come down a lot since 2007, but it’s at the top of the range it’s been trading in for the last four years, and that’s eroded most of gains we’ve seen in competitivness,” she said.

“However, if we got the sort of productivity improvement I think we may get, then that would be a silver bullet that would help UK competitiveness without a fall in sterling.”

The Bank expects productivity to pick up as the recovery gains traction. However, many economists disagree, and believe entrenched levels of low productivity will push the unemployment rate towards the 7pc level needed to unlock an interest rate rise more quickly.

Mr Weale also warned of the dangers of keeping rates at their record low for too long. He said increases in inflation expectations may force the Bank to raise rates before all spare capacity in the economy is used up.

His comments underline the dilemma at the centre of the Bank of England’s monetary policy decisions. A strengthening economy and return of interest rates to normal levels are likely to strengthen the pound, helping to drive a bigger current account deficit.

Mr Weale said “forward guidance” meant MPC members had to be more rigorous than in the past about gauging inflation expectations.

“We cannot risk a situation where people say we are deliberately looking the other way if the data show a significant change in inflation expectations,” he said.

UK inflation has run above the Bank’s 2pc target for more than four years as policymakers focused on getting the economy growing after the financial crisis. However, consumer prices inflation fell sharply to 2.2pc in October, forcing the Bank to revise down its forecasts sharply.